Reddit, the self-proclaimed “front page of the internet,” has banked $250 million in new growth funding — giving the online discussion site a valuation of $6 billion.
The company announced the funding round late Monday. The funding was led by VC firm Vy Capital with participation from existing investors and doubled its valuation, per the Wall Street Journal. In 2019, Reddit raised $300 million in funding, valuing the company at around $3 billion, from investors including Tencent, Sequoia Capital, Fidelity and Andreessen Horowitz.
Reddit, which says its site attracts more than 50 million daily users, has been in the headlines the last several weeks — after users on one of its discussions forums, r/WallStreetBets, caused stock-market chaos after promoting stocks targeted by short sellers. In the wake of the volatility, which prompted shares of GameStop, AMC Entertainment and others to soar, the SEC has said it “will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws.”
Seeking to capitalize on the attention, Reddit purchased a 5-second Super Bowl ad in nine major markets on CBS. The ad comprised a text-based slate, which read in part, “underdogs can accomplish just about anything when they come together around a common idea… Who knows, maybe you’ll be the reason finance textbooks have to add a chapter on ‘tendies.’”
Reddit said that with the new tranche of financing, it has aggressive expansion plans, including doubling its headcount in 2021 — from about 700 to 1,400. The San Francisco-based company claimed that “it’s surprising” that “such a relatively lean team has been behind one of the most visited websites in the world.”
“We decided that now was the right opportunity to make strategic investments in Reddit including video, advertising, consumer products, and expanding into international markets,” the company said in a blog post. “We are confident in our mission to provide community and belonging to everyone and are well positioned for the growth we have planned.”
The company also touted growth of its advertising business, saying that its direct advertising revenue increased 90% in the last quarter year-over-year.
Reddit called out its acquisition of short-form video platform Dubsmash in December, aimed at integrating video creation tools into its platform and to “encourage under-represented creators to find a home on Reddit.”
“We continue to invest in building and improving the ways people on Reddit connect — whether that’s traditionally through text-based discussions or through video or live streaming,” the company said.
Reddit was founded in 2005 and acquired by Condé Nast in 2006. In 2011, Condé Nast spun out the site; parent Advance Publications retains a stake in Reddit.